My previous post on ‘Brilliantly New Idea – No one has thought‘ generated lot of interest in my readers. So much so that some came back asking for more suggestions on what else one can do to be successful.
Frankly, this is a difficult ask. And more frankly, there is no cookie-cutter formula. Starting up any initiative or business is a risky proposition. Successful ones ride on, ones that don’t succeed teach many things and get buried.
I consider this as a trick question. Why? There are plenty of ‘known’ scientific and qualitative mechanisms that are available. Consider surveys, focus groups, qualitative mapping etc. These techniques are great to understand the customer and define the offering. However, we need to go to the next level of detail on where to start. This is something that bothers many.
I have put together following 8 questions that give you a fair idea of what can be done – whether a new initiative or a new business. Note that these are ‘outcome’ focused and not ‘technique’ focused.
- What need am I fulfilling?
- What is my market – who and how big?
- Whats my arena?
- What kind of operations are required? What can I NOT do?
- Whats the right technology mix for me?
- Do I have any Government Support – anywhere, any form?
- How easily or difficultly can I access funds?
- How far can I go?
They take you closer to success.
Lets begin with the first question.
What need am I fulfilling?
Any initiative (business or in corporate) that is not fulfilling a need should not be even considered. Any manager or businessperson or ‘starting up’ individual should be able to define the need properly. A company like Cashify (run by my dear friend Mandeep) is addressing need for sales and repair of old mobile phones and other electronic gadgets once a new one is bought. He is very successful in doing so. At a different scale, the next door milk or vegetable vendor is serving the customer need of providing the daily supplies to the customers. Large companies all have a need that they start with and gradually grow into fulfilling multiple needs. This is what the business does. This is what a new initiative in the organizations does. So as a budding manager or as an entrepreneur, you should be able to clearly articulate the need that you are fulfilling.
There is no better judge to identify the needs then you yourself. If you can’t articulate the need then dont proceed. Stop right away and work more to find the need.
What is my market – who and how big?
Once a need is defined, one needs to go back to the previous blog and start identifying the scale. This is a tricky but an essential exercise. Its intimidating for some but not as difficult as people think. I generally find it a hypothetical exercise wherein one can make assumptions and then test in the market. Lets say you want to start a new service for servicing employment based skills to all MBAs graduating in India. We shall use the indirect or secondary methods to map the customer and then size the market.
- Secondary Methods (Desk methods) – These methods generally are done from your desk. These include researching over the internet or business articles. For our example, we are clear with the map. We need to cater to the students of MBA schools across India. Before, we start sizing exercise, lets assume few things –
- Students in Alpha Primary B-Schools in India are assumed to be employable so they may not require our services. Lets not consider them.
- Students in all other B-Schools would have a large percentage of students who are either not getting placed or are having tough time in finding the right job for themselves.
- Students in point No 2 above lack the skills required for the hot sectors in the market and are assumed to be good in all other skills like communication skills, presentation skills etc.
With this if we run a google search on number of B-Schools in India, we shall get the following results:
1. Number of B-Schools in India – 4500
2. Number of MBAs graduating every year – 3,60,000
This is good enough numbers to get started. Assuming that we have 80% of these students who require guidance, we get a total market size of
3,60,000 * 0.8 = 2,88,000
Lets say our service is going to be worth Rs. 1,000/- in that case the total market available is
2,88,000 * 1000 = Rs. 288,000,000
This is a compelling proposition to explore. The additional advantage in this services model is the fact that this is going to be a growing and annually churning market. So for this particular case, we have a reasonable market size to begin our next study.
As you can see, we have mapped the market first and then decided to size it for a basic service. In another case, where lets say we have a flavoured drink that we want to serve to the same set of customers, we would additionally assume that MBAs are likely to consume the drink 3 every week and when we are able to reach the complete market then, we have an opportunity of
360,000 * 3 * 52 * 15 = Rs. 842,400,000 /-
Assuming that that price for the drink if Rs. 15/-.
Note : Both these cases are very crude, back of the envelope type of calculations. it is important to do more research and authenticate data from 3-4 sources. A Government source will definitely give more credibility to numbers. Though generally the government numbers are conservative.
- Primary Methods (Field Methods) – These are also called as Field Methods. Generally, surveys, product tests and more specifically gauging the interest of the consumer. The methods typically engage the hypothesis testing kind of approach where the researcher or the manager or the entrepreneur should approach the target group with specific agenda for engagement. This is also the first time when you speak to the potential customers so it is important to do a thorough secondary research before you reach out. The inputs from the primary research shall help in doing the right kind of preparation to enter the market. Many a times it throws a lot of surprises too. For example, in your study for employment skills services business above for MBA, a fundamental assumption that MBAs are good at communication skills may be completely wrong. You maybe compelled then to change your offering. Some of the common methods of primary research are given below:
- Observation – Of a focus group when a product is given to them or a service is being discussed with them.
- Surveys – online and paper based
- Focus Groups – Groups that would give their feedback about a product or service in a closed, lab type environment
- Test Marketing – Popularly called as Beta Tests by software firms to check out features or entire products with select customers to fine tune offering. generally it is done away from the eyes of the competition.
One thing that needs to be kept in mind before proceeding with the Primary Research methods is identifying the right sample for survey or focus group or any other technique. If this is not done right, then you may get skewed results and consequently the research would be a failure. For example in our case of employment services for the MBA students, if we pick a sample only from one college or from one geo or just males then it would not give us the right study results.
Will stop here in 1st of the three blog series. The vastness of the subject leaves too much to cover in a single blog. Feel free to share your comments and your feedback to make it a fun learning series.